The Tax Realignment Commission (TRAC) has been meeting since September, hearing from numerous groups about tax revenue and exemptions. Now the work of that group to redesign the state’s tax structure is a primary focus of state lawmakers and business leaders.
Now the group is being given more time to develop its report. Originally scheduled to give its information to the General Assembly this March, TRAC leaders now say they need until November. And some lawmakers are concerned that the group needs to be kept on track.
Senate Finance Chairman Hugh Leatherman told the Senate last week about the request for an extension. “If you can just imagine, the comprehensive study they’re trying to do,” he said. “I can’t imagine looking at all of the tax structure in South Carolina. But that’s what they’re after.”
Leatherman assured his colleagues that the commission has been told to exclude Act 388 from its consideration. Act 388 cut property taxes for schools but allows taxes to be assessed each time some real estate is sold. Senator Larry Martin and a bipartisan group of Senators have sponsored a way to cap and adjust that point-of-sale tax.
Democratic Senator Nikki Setzler of Lexington County was an original sponsor of the bill that created TRAC. But now he says he’s disappointed. “They say they want an extension until November, but I’m told that they were told in the last meeting that there is a bill being drafted,” he said. “Their job is not to draft legislation. Their job is to give us a report. I ask that the TRAC members refocus, that they debate the issues, not just read them, but debate whether the taxes are good for South Carolina in the 21st century.”
Setzler wants TRAC leadership to come before the Senate Finance Committee to clarify the commission’s focus.
Senate President Pro Tem Glenn McConnell told us that he believes that the work of the commission is important. But the Charleston senator is emphatic that the report from TRAC will not be voted on as a whole package, without the possibility for lawmakers to amend it. A single up or down vote on the package, in his opinion, would be unconstitutional. “You cannot restrict a public official’s right to amend a bill,” he said. “But we’re going to look very carefully at this(the report). We’re hopeful that they are going to bring back some excellent suggestions and possibly another way to fund government. But now if it’s a revenue hunt, there are some of us who are not of the mind to raise taxes in South Carolina.”
McConnell says he wants a comprehensive report from TRAC, including an analysis of all exemptions. He gives an example of an exemption he says makes no sense. “If you go to a gift shop at a state institution in Charleston, it’s 7.5 percent less to buy an item than it is to buy the same item at a private store,” said McConnell, an attorney who previously ran a shop in the Charleston area that specialized in Confederate War art and memorabilia. “Under our tax code, non-profits are not allowed to charge sales tax. It makes absolutely no sense.”
As another debatable tax item, McConnell also mentioned a tax on the cleaning up of portable toilets now collected by the Department of Revenue. Senator Setzler says South Carolina government has around a billion dollars in sales tax exemptions.